Bangladesh moves to hike gas prices as it readies for LNG import

Bangladesh regulators are gearing up for another round of gas price hike after revising it last year as the country is set to join the club of liquefied natural gas or LNG importers.

Officials at the state-run energy corporation Petrobangla anticipate that prices may have to be doubled once LNG import starts in late April or early May.

Petrobangla is proceeding to push up the price while Bangladesh Energy Regulatory Commission or BERC is following suit.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid has also hinted at a possible rise.

“Prices for industrial and commercial gas supplies as well as power have to be revised after LNG import starts,” he said on Friday while speaking to a group of journalists.

He, however, did not make it clear whether prices of household gas will go up. “The BERC will make the final call after holding public hearings.”

Gas prices were revised up by an average of 22.70 percent in February last year with households hit with over a 50 percent monthly rise for stoves.

The imminent LNG import has triggered the plans for a second round of revision, a little over a year after the last hike.

The government hopes to start the import between late April and early May as the construction of the LNG Terminal by US-based Excelerate Energy is almost finished.

The floating terminal at Cox’s Bazar’s Maheshkhali will have a regasification capacity of up to 500 million standard cubic feet of gas per day.

Petrobangla recently informed the Bangladesh Power Development Board and Bangladesh Chemical Industries Corporation that it will not be able to sell gas below Tk 13 per cubic metre after the LNG import starts, up from its average rate of Tk 7.35.

Prices (per cubic metre) after last year’s revision

Sector	Price	Rise (%)
Power	Tk 3.16	12
Captive Power	Tk 9.62	15
Fertiliser	Tk 2.71	5
Industrial	Tk 7.76	15.13
Commercial	Tk 17.04	50

Households are charged at a monthly rate in two categories — Tk 900 for single burner stove and Tk 950 for double burner stove, which was hiked by 50 %.

A fresh round of revision will lead to an increase in living costs, but State Minister Hamid says it will not be “shocking”.

“A lot of calculation, research and planning have been done over the last one year with all the stakeholders,” he said.

LNG import will enable supply of gas to the duel-fuel power plants, which now use oil, said Hamid adding it will cut the cost of power production.

According to Petrobangla, 2,667 million cubic feet gas was supplied on Thursday with a deficit of more than 1,000 Mcf against the demand.

Power plants got 917 Mcf against the demand of 1,841 Mcf over the same period while fertiliser factories were supplied 98 Mcf against a demand of 316 Mcf.

“LNG will undoubtedly save money in production at duel fuel power plants,” said energy expert M Tamim.

“But gas needs to be supplied mainly to the industries. As far as I know, industrial gas price has been proposed to double in Chittagong.”

Nasrul Hamid.

On hiking gas for industrial and commercial usage, State Minister Hamid said they had looked into that aspect.”

“The market will remain stable,” he said adding uninterrupted gas and power supply will help businesses to grow.

Petrobangla says it incurred a loss of Tk 5.11 billion by selling gas for fertiliser production and Tk 36.21 billion for power generation in 2016-17 fiscal year.

It anticipates more losses, even if gas is sold at Tk 13 per cubic metre following LNG import.